Ep. #39 - Rental Rehabs (Part 2) - Tenant Proofing

Many people who feel they'd never want to own Rental Property and be a Landlord - fear that Tenants will just treat their property like animals... Or worse, they will let their animals treat their property like animals. They just know that somethings going to get damaged or broken just about every other day, and their going to get calls at 2AM about clogged toilets. True or not, there are things you can do in your Rental Rehabs to make such occurrences far less likely.

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Intro...

Welcome to Episode #39 - Rental Rehabs (Part 2)… Tenant Proofing.

So let me start right out by saying that the BEST method of Tenant Proofing your Rental Property - is to effectively screen for problem free Tenants. No amount of Tenant Proofing during the Rental Rehab will make up for a bad Tenant selection. Choose a BAD Tenant and you're going to get a BAD outcome every-time - no matter what!

I've touched on aspects of Tenant Screening in prior episodes, but I'll do an episode specific to this discipline next year. But for the purpose of THIS episode, I'm going to assume that you're implementing proper Tenant Screening procedures - because you can't out Tenant proof for BAD Tenants.

Now beyond that (unfortunately not nearly as obvious point as you'd think it would be) - let's get on to the actual Tenant Proofing of your Rental Rehabs for otherwise decent Tenants.

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Floors, Faucets & Fixtures... So lets start from the ground up. One of your biggest Tenant turn expenses is flooring. Put in the wrong flooring and you'll be replacing it with each tenant (if not during a tenancy). Ideally you want to get a useful life out of your flooring that runs years and even has the potential to span multiple tenants.

Where possible, avoid carpet... Occasionally, I'll put carpet in bedrooms - when I'm over or near my budget limitations. And some Tenants actually prefer carpet in their bedrooms. But whenever I've got room in the budget to do so, I spend a little extra up front to get more durable flooring, even in the bedrooms - they'll get over it.

It's rare for even the most durable carpet to survive Tenants beyond a year or two (three if you're lucky) - especially those with children. I remember how disgusting the carpet became in my own home, just from having 1 child and a dog - before I replaced it with all hardwood. And I cleaned and vacuumed regularly - something you cannot be confident a Tenant will do.

Instead of carpet, I go with LVP and LVT, which is Luxury Vinyl Plank and Luxury Vinyl Tile. Previously I would put LVP in halls and family or living rooms and dining rooms, with LVT in the kitchen and baths (wet areas). But on my latest projects, I just went with LVP (the plank) everywhere, including the wet areas - since its supposed to be waterproof.

I like LVP (Luxury Vinyl Plank) because it looks great, is quick and easy to install, reasonably priced and its pretty durable. You have to instruct your Tenant on how to care for it - like not using anything abrasive to clean it. But with basic reasonable care, it should last for many years and multiple Tenants. And so if you go with LVP (even in the bedrooms), the additional cost should be re-captured at your very first Tenant turn - when you thereby don't need to replace any flooring.

LVP is great, because unlike hardwood flooring, it's not as easy to dent or scratch - but either or both can and do happen. For this reason, I always keep extra planks, and use the same color and style in each property. When needed, with a little effort, it's possible to pop-out a damaged plank and replace it with a new one.

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Faucets... So when doing a Rental Rehab, you'll be tempted to use cheap faucets - or to allow to remain whatever is present already. Now I'm certainly not going to tell you to replace what are perfectly good and functional faucets if they are also good in appearance. But if you must replace a couple of faucets anyway, consider replacing all - and doing so with quality Delta brand.

My plumber once mentioned to me that Delta is the standard and best. I was once taking over a rehab where it had only gotten to the point of plumbing rough-in when I acquired it, and he stated that it was beneficial they set for Delta in the showers. Should I ever need to replace anything, get spare parts or whatever - Delta was the standard and best.

He also recommended that where faucet replacements would be needed anyway, that I should always replace with Delta. Now I've only recently started to apply this advice, because Delta was more expensive - and I thought a faucet was a faucet.

But his argument was that when you come across a 30 year old faucet that still works and looks great, it's likely to be a Delta. But I don't know... Maybe Delta was the dominant (or only) brand 30 years ago. Whatever - I've gotten the message, so I've started to replace my faucets (when I do replace them) with Delta brand.

And to make my Rental Properties more desirable, I opt for upgraded styles - with the best balance of price to appearance I can justify. What I'm primarily seeking is durability / longevity. To that end, I also try to minimize the number of moving parts. For instance, I hate faucets with the pull-up plunger to raise and lower the sink stopper. That's just something else to break. Instead I use the push sink stopper, that closes with one push and re-opens with another. Fewer moving parts, so more Tenant proof.

Likewise, no garbage disposals in my rental properties. I won't remove them when already present and in good working order. But in such cases, it's stated in my lease that they are a tenant repair / replacement responsibility should any issues arise. And so if the tenant expects us to handle any such issues, it's stated in the lease that we'll just remove it (not repair or replace) - as that's just something else to break, and the Tenant rarely knows how to properly use a garbage disposal anyway. Having one just encourages them to put things into the kitchen sink drain that should NOT be - No Thanks!

And while I opt for upgraded stainless steel appliances - I avoid ice-makers and water in the door. Although I will put these in where the water source is already present and the ice-maker doesn't cost me anything extra. But here also, I make it clear in my lease that if the ice-maker or water fail - I do not fix it or replace the refrigerator or anything like that. Those features are there as long as they work, and if they stop working, I was under no obligation to provide an ice-maker or water in the door refrigerator anyway - as they are just something else to break.

And while I'm thinking about water - here's a good time to mention that most of your problems in a Rental Property will be plumbing / water related. So if any plumbing work is needed, go ahead and opt for the more durable pipes and connectors from the start. I've spend hundreds repairing water damage done because a plastic fitting at the toilet water connection broke - should have replaced it from the start with metal, even though the original plastic fitting was working fine at the time.

And whenever I acquire a new Rental Property, I pay for the entire plumbing system to be serviced - replacing plastic fittings, snake the line and the toilets, check the water heater, and on... And this allows me to place any future plumbing clogs on the tenant to handle on their own (or reimburse me for handling on their behalf) because I can prove the system was clog free when they moved it. So short of roots in the line or some other system fault, it's on them to handle or pay for any plumbing issues - as I certainly didn't put anything into the toilet or sink to cause a clog. I don't live there.

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Fixtures... So this would be your toilet paper holders, towel racks, soap dishes and tooth brush holders. But also your door knobs, drawer and cabinet handles, fans, and as in the name - light fixtures.

Now for the lights, you want them to look good of course (upgrade a bit here for best appearance), but they must also be durable. Thankfully, unlike faucets, they are not being touched by the tenants every day and likely have no moving parts - so you can focus a bit more here on the style to cost balance.

But for things that are getting touched and pulled on - you want those to be extreme durable and installed well. For example, I mount my toilet paper dispensers, towel racks, soap dishes, tooth brush holders, and all - into solid wood with large / long screws. I want a person to be able to stand on my toilet paper dispenser or towel holders and be fine. Not that they would do that - but then again, you never know. No more drywall screws for me, at least not where possible to avoid. And not in my later properties anyway, as I didn't start this until I was several years in.

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So we've covered the floors, faucets and fixtures. So that's the ground up, but how about the walls? The paint... Like flooring, you almost always end up having to paint at each tenant turn - its a pain. I use the same paint in every rental property - just like I try to use the same floors. So I go with flat paint on the walls and semi-gloss on the trim. I'm generally able to wipe stains off the walls at tenant turns (or they are able to do so themselves) - because I use a high quality paint. But I can also quickly repaint or touch-up as needed, as the paint is easily matched and blends well, since its flat and I use the same paint on each property. And did I mention that its high quality paint. Don't go cheap on your paint. Better to go cheap on your painters than your actual paint.

But in closing... Third to proper tenant screening and the materials used being second, the next most important aspect of tenant proofing your rental rehab is your on-boarding process and inspections.

You need to make sure that your on-boarding process is fully informative to the tenant and sets your expectations as to the care and upkeep of the property. I go over critical aspects of the lease and details about the home. You must make sure that they know where the master water shut-off value is located. What should and should NOT be put into toilets and drains. How to prevent and address fires; as well as, where fire extinguishers are located and how to use them.

I cover what cleaning materials to use (and NOT to use), including providing the initial bottle of things like floor cleaner, stainless steel cleaner, toilet and shower cleaner, and all. I video much of this orientation and conduct a walk-thru of the property on video as well. During this walk-thru, I detail the current state of the property, with special focus on those things that are most often the cause of hits against the tenant's security deposit.

Now couple this orientation and video walk-thru of the home with the tenant's knowledge of (and my follow through on) regular in-person inspections of the property - the end result is most often a problem free tenancy. And when I do eventually encounter a tenant turn, it most often requires little to no additional work to make rental ready again - and I'm often able to return the tenant's full security deposit.

So don't be afraid of being a landlord. Just tenant proof your property and sit back and then enjoy the cash-flow, tax benefits and wealth creation of being a Rental Real Estate Investor... and Landlord!

Outro...

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